Dubai’s economy has been on a rollercoaster ride over the past years. After collapsing in 2009 as a result of the emirate’s debt crisis and the bursting of its real estate bubble, it has quickly recovered.
The Department of Economic Development (DED) expects the economy to grow more than 4 per cent in 2012, although analysts predict a much lower number. Whatever the figure, the rapid turnaround in growth has helped restore Dubai’s confidence, which had taken a knock after its debt crisis made headlines.
At the beginning of the year, the DED was working on revising the 2015 growth plan, taking into account the new lower global growth environment. When Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum announced the original 2015 plan in 2007, it projected the emirate’s economy growing at an average of 11 per cent a year and a gross domestic product of $108bn. Plans to revise these targets seemed to suggest an acceptance that this was beyond the ability of even Dubai’s rulers, who have never lacked ambition.
But recent statements by Sami al-Qamzi, director-general of the DED, suggest that the emirate has changed its mind again. Despite a weak global environment, Dubai has resurrected the targets of the 2015 plan. But is this achievable or even desirable? Dubai’s recovery has been based on the sectors that underpinned its diversification – trade, tourism and logistics. Without the boost provided by the real estate and construction sector, meeting the targets will be challenging.
Dubai’s boom years elicit mixed emotions from those who lived through them. Inflation was out of control at the time and corruption seemed rampant. Engineering a soft landing from such rapid growth is difficult. With about $110bn of debt still outstanding, Dubai needs sustainable growth, not another boom and bust.